UBS urges Swiss government to clarify capital demands after Credit Suisse purchase, sources say

is pushing the Swiss government to clarify how much more the bank will need to hold in capital buffers after buying Credit Suisse, amid concerns the talks will drag on for months, unnerving investors, sources familiar with the matter said.

They also worry the government has not clarified whether the $15-billion-$25-billion in extra capital the finance minister said in April UBS may need, is on top of the $19-billion it has already committed to hold to reflect its increased size, the people said. Representatives for UBS and Switzerland’s government declined to comment. A spokesperson for FINMA said it was important to ensure the resilience of supervised banks and that it supported the government proposals, including on capital.

UBS executives believe further demands could put it at a competitive disadvantage versus U.S. and European peers. CEO Sergio Ermotti has hit out at calls for more regulation, saying it risks undermining Swiss banking. A year-long rally in UBS shares has faded since the draft rules were unveiled, with the stock falling more than 3 per cent since against a near 2 per cent rise among peers. Two key UBS investors this year flagged concerns that the bank could be on a collision course with regulators over its size.

If UBS presents a sound plan to unwind the bank in the event of a crisis, and if other too-big-to-fail rules to strengthen the regulator’s powers are approved, FINMA – whose views the government takes into account when approving the rules – could require less capital, the person said.

Source: Loan Digest (loandigest.net)

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